Financial-Spread-Betting: Hi, can you introduce yourself and your company to our readers?
Dermot: My name is Dermot O'Donoghue - I'm Managing Director of Delta Index, Ireland's leading financial spread betting company. I was previously Head of Treasury at Allied Irish Banks (AIB) Group until I retired from AIB in 2000. I spent 30 years at AIB both in Dublin and London.
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Delta Index allows investors to trade, both online and by phone, on the world's financial markets. Clients can spread bet on the major stock market indices, currencies, commodities and interest rates as well as on individual Irish, UK and US shares.
Financial-Spread-Betting: When did Delta Index first open for business?
Dermot: Delta Index opened for business in October 2002.
Financial-Spread-Betting: Where exactly is your business located? Do you have any international offices?
Dermot: Delta Index is located in Dublin, Ireland. We do not currently have any international offices, though we do anticipate entering an overseas market in 2005.
Financial-Spread-Betting: What are the minimum/maximum stakes?
Dermot: The minimum bet size on all markets (indices, shares, currencies etc) is €1 per point. Our maximum online stake is €200 per point but we can cater for higher stakes if required.
Financial-Spread-Betting: What is the minimum deposit required to open an account? Is there a maximum deposit?
Dermot: The minimum deposit is €500. A deposit is required before any bet can be made. There is no upper limit to the amount of funds you can deposit in your Delta account.
Financial-Spread-Betting: What is the Initial Margin Requirement (and general margin requirements)?
In normal circumstances, the maximum amount you can lose is limited to the amount deposited in your account. Delta Index will attempt to close losing positions before an account reaches zero.
Dermot: Typically the requirement is 2% - 20% of the total value of the position. A reasonable rule of thumb is that the IMR (Initial Margin Requirement) for a stock market index is in the region of 5%-8% while the IMR for a currency is generally in the region of 2% - 4%. The IMR for an individual share is generally in the 10%-20% region.
Financial-Spread-Betting: Do you offer Stop Losses/Credit Betting/Demo Account facilities? Also, can Stop Losses be activated when you are closed? Do you apply slippage?
Dermot:Financial-Spread-Betting: Please explain how you handle re-quotes and order confirmation times. And fast markets?
Dermot: We only change quotes in volatile markets or in the unusual event of an incorrect price feed.
Financial-Spread-Betting: Having looked at your trading screen it appears that you don't offer trading on top US NASDAQ stocks such AMGN, MERQ, QCOM..etc?
Dermot: We have now introduced additional NYSE and NASDAQ stocks and will continue to expand our product range over the summer. We now cover Amgen and Qualcomm will be added in July.
Financial-Spread-Betting: Do you accept deposits by BACS?
Dermot: We accept deposits by VISA, cheque, banker's draft and electronic fund transfer. We also accept payments by Laser (Irish Debit Card), but do not currently accept deposits by BACS.
Financial-Spread-Betting: What is the maximum amount you can lose? (do you take bets on credit?).
Dermot: In normal circumstances, the maximum amount you can lose is limited to the amount deposited in your account. Delta Index will attempt to close losing positions before an account reaches zero. However, in a fast moving market it is possible for an account to fall into deficit and in this event a client will be required to make up the shortfall. We do not take bets on credit.
Financial-Spread-Betting: Do you accept Irish clients? UK clients? What about international clients?
Dermot: We accept any resident of the European Union who has a bank account in the European Union.
Financial-Spread-Betting: Are there any general safeguards for clients - protected accounts for clients' money or segregated accounts...etc?
Dermot: Client funds are deposited in a client designated account with Allied Irish Bank. In addition, the firm will establish professional indemnity cover by the end of the summer.
Financial-Spread-Betting: Are you regulated by the FSA (United Kingdom)?
Dermot: Delta Index is a licensed bookmaker in the Republic of Ireland and is regulated by the Customs and Excise Department of the Irish Revenue Commissioners. Delta Index is not regulated by the FSA.
Financial-Spread-Betting: How wide are the spreads? How do they compare to other spread betting firms?
Dermot: We aim to be competitive against other firms. We review our spreads every month to ensure competitiveness versus our competitors.
Financial-Spread-Betting: What are your unique selling points (services are you offering that others aren't)? Why should our viewers switch from another spread betting firm to Delta Index?
Dermot: Delta Index is an Irish-based firm which has a particular focus on the Irish market. We offer a wide range of Irish shares as well as the ISEQ. Our trading platform is extremely user friendly and easy to use.
Financial-Spread-Betting: What instruments are available to bet on at Delta Index?
Dermot: Delta Index offers a range of markets in Irish, UK and US shares, World indices, currencies, bonds, interest rates and commodities. Our product range is expanding significantly over this summer (2004).
Financial-Spread-Betting: As of now, what trends do you see in the markets people choose to trade? Are there certain markets that clients seem to prefer? Do you think this will change over time?
Dermot: We get a lot of interest in Irish shares, currencies and indices. However, as we've recently begun to increase the number of US shares we offer, we're seeing a lot of interest there also.
Financial-Spread-Betting: Do you ever see the tax-free advantage of spread betting disappearing?
Dermot: While this is a possibility, it is unlikely given the benefits to the Irish economy of the current taxation regime.
Financial-Spread-Betting: Getting beyond the up-front process, how do your people actually execute? Do you have principles of execution?
Dermot: Delta Index does not generally hold positions against clients or the markets and our internal risk management systems ensure that only a small, residual risk can exist.
Financial-Spread-Betting: Are there traders who make a living through spread betting at Delta Index? What is the trading style and methods that these traders use for winning consistently?
Dermot: We have a number of day-traders trading with Delta Index, however most of our clients are ordinary investors. The most successful day-traders make heavy use of technical analysis and trade most frequently in the daily Indices.
Financial-Spread-Betting: Do you hedge the client aggregate positions or bear the risk yourself? We have heard several spread betting firms claiming that they hedge their exposure in the underlying markets but how do you exactly do this in practice?
Dermot: Delta Index aggregates client bets and sets "acceptable" thresholds per market/market group above which we hedge using futures and/or options. These risk thresholds are set at very low levels to avoid the firm taking on excessive 'market risk'.
Financial-Spread-Betting: Are there issues of competition between spread betting firms and conventional firms where the products they offer carry similar economic exposure but where best execution is applied differently?
Dermot: Our primary target market is the clients of conventional stock-brokers. The case for switching to spread betting is overwhelming given the enormous costs with the traditional route - both in commissions and taxes.
Financial-Spread-Betting: There are many sayings in the markets, do you have a favourite one?
Dermot: You'll never go broke taking a profit.
Financial-Spread-Betting:
This concludes our interview with Dermot O'Donoghue, of Deltaindex. Remember to check out Delta Index's brochure here. Please feel free to browse other articles on this site and come back next week for our next exciting interview. If you have any questions regarding this interview or would like to suggest an interview, please contact webmaster@financial-spread-betting.com
Update 2nd August 2005 - Euro Bonds added to Delta Index's product list. The French CAC index is also now being offered while the selection of available UK and US stocks has been increased
Here is a past interesting story outlining Delta Index's Conor O'Neill's background
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